Table of Contents
Which are the three categories of accounting?
The three categories of accounting are given below:
1. Financial Accounting
2. Cost Accounting
3. Management Accounting
Financial Accounting:-
Financial Accounting is concerned with recording the transactions of financial character, summarising and interpreting them, and communicating the results to the users. It ascertains profit earned or loss incurred during a period (usually one year as accounting year) and the financial position as on the date when the accounting period ends. It can provide financial information required by the management and other parties.
Main aims:
1. Ascertain profit or loss of the business enterprise by preparing Trading and Profit and Loss Account.
2. Ascertain the financial position of the business enterprise by preparing the Balance sheet.
Cost Accounting:-
It is that Subfield/Branch of accounting which is concerned with ascertainment of total cost and per-unit cost of goods or services produced/ provided by a business firm. It also helps in controlling the costs and providing necessary costing information to management for decision making.
Main aims:
1. Ascertain the cost of the product.
2. Ascertain the cost of the Services.
3. Ascertain the total cost of the product and Services.
4. In order to enable the management to fix the selling price.
Management Accounting:-
It is that subfield/Branch of accounting which is concerned with presenting the accounting information in such a manner that helps the management in planning and controlling the operations of a business and in better decision making. Basically, it is meant to assist the management in making rational policy decisions and to evaluate the impact of its decisions and actions and the performance of various departments.
Main aims:
1. To provide all the relevant information to the management that may be required to take decisions in respect of various aspects of running the business enterprise.
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